The cultural sensitivity in harmonisation of international arbitration: lessons from China Article (Accepted Version) Bu, Qingxiu (2020) The cultural sensitivity in harmonisation of international arbitration: lessons from China. International Arbitration Law Review, 23 (1). pp. 70-90. ISSN 1367-8272 This version is available from Sussex Research Online: http://sro.sussex.ac.uk/id/eprint/90021/ This document is made available in accordance with publisher policies and may differ from the published version or from the version of record. If you wish to cite this item you are advised to consult the publisher’s version. Please see the URL above for details on accessing the published version. Copyright and reuse: Sussex Research Online is a digital repository of the research output of the University. Copyright and all moral rights to the version of the paper presented here belong to the individual author(s) and/or other copyright owners. To the extent reasonable and practicable, the material made available in SRO has been checked for eligibility before being made available. Copies of full text items generally can be reproduced, displayed or performed and given to third parties in any format or medium for personal research or study, educational, or not-for-profit purposes without prior permission or charge, provided that the authors, title and full bibliographic details are credited, a hyperlink and/or URL is given for the original metadata page and the content is not changed in any way. http://sro.sussex.ac.uk The Cultural Sensitivity in Harmonisation of International Arbitration: Lessons from China Introduction Cultures shape the instincts and expectations of stakeholders in the international arbitral process. Such a variable may psychologically influence an arbitrator’s performance. Although arbitration has emerged as a credible means of resolution of cross-border disputes involving parties from variant cultures, the understanding of cultural ramifications remains limited. China has a distinct cultural approach to international arbitration, which is uniquely shaped by its preference over non-confrontational methods of conflict resolution. In the rapidly expanding field of international arbitration, however, the cultural effect should not be overread given the increasing convergence in both rules and norms, which is arguably perceived to result from economic rather than cultural factors. this study seeks to fill a gap by providing an in-depth critic of the cultural role in cross-border arbitration. The paper starts from a brief discussion about intersection of arbitration and culture. It is essential for stakeholder to be aware of cultural sensitivities during the international arbitral process. This part looks at conciliatory and adversary modes on the ground of confrontation and harmony approaches. It then examines the epistemology of determining facts in various legal cultures, which are manifested in complicating effects of culture in legal proceedings. An inquiry arises as to whether an international arbitration culture could exist. The second part moves to a hybrid model with mediation and arbitration combined. Both Chinese statutes and the institutional building are integrated into the system. This part seeks to account for some systematic implication influenced by China’s top-down implementation of the hybrid model. The third part considers the globalisation of arbitration theoretically, which is focused on a two-way interaction between globalisation and localisation. Some barriers are not limited to mere diverse norms, but potential incompatibility that inhibits inherent transplantation. To address the above challenges, the fourth part lays more weight on theoretic critics on the classic “path dependence” theory. This part ascertains further whether culture still serves the mother of all path dependencies among other variables, such as poli- economic factors and other judicial settings. It is argued that a rational choice made by an arbitration party depends largely upon a sophisticated benefit-cost analysis. The fifth part challenges the global arbitration culture from the perspectives of procedural convergences vis-à-vis cultural syncretism. The conceptual critics of international arbitration culture suggest that stakeholder strike a balance between oversimplifying and generalising the relations between cultural variables and international arbitration. At stake is to transform the findings into behavioural changes. Base on the above findings, it is concluded that it is essential to harmonise the differing cultural approaches to enhancing credibility in international arbitration. It is suggested that the procedural convergence is not necessarily reflective of an emergent international arbitration culture. Notably, further research is needed since it is short of a more appropriate methodology to quantify and qualify the causal link between the cultural effect and designed outcomes. 1 A. The Intersection of Arbitration and Culture Arbitration typically consists of a three-person panel operating under rules that are often modelled on the arbitration rules of the UN Commission on International Trade Law (UNCITRAL).1 When arbitration becomes transnational, the resulting fusion of different legal cultures gives rise to a multiplicity of perceptions affecting each component of the arbitration proceedings.2 Notably, legal cultures do not exist in an intellectual vacuum. Rather they are the products of some fundamental values of a society, based on the perceptions of justice and social norms.3 Deeply influenced by the Confucianism in pursuit of harmony, Chinese parties resort to informal procedures of dispute settlement instead of recourse to confrontation. Due to the divergent conceptions on the role of arbitrators in different cultures, the appropriateness of arbitrators to facilitate settlement is one of the most hotly-debated issues.4 1. Culture Influences Culture has influenced the development of dispute resolution, with which it determines what goals and values are associated. Some cultural issues should be explored to improve the process of resolving cross-cultural conflicts.5 In China, it represents a growing area of dispute resolution because of its desire to participate in the world economy and the traditional low- keyed role of its judiciary.6 The Chinese traditional legal culture has had enduring influence upon contemporary arbitration practice.7 This tradition of harmony has a deeply-embedded philosophical basis in China, which is considered paramount to maintaining social stability.8 Chinese generally prefer negotiation between two sides with the assistance of a third party to reach a settlement. They relatively dislike direct confrontation with each other and being judged by third parties, as it symbolises disruption of harmony. Given this cultural propensity to avoid confrontation, the parties are unlikely to resort to judicial intervention.9 1 The Model Law was adopted by the UNCITRAL on 21 June 1985, at the 18th Session of the Commission. It was amended by UNCITRAL on 7 July 2006 at the 39th Session of the Commission. The UNCITRAL Model Law on International Commercial Arbitration, U.N. Sales No. E.08.V.4 (UN Commission on International Trade Law, 2006) 2 Bernardo Cremades, ‘Overcoming the Clash of Legal Cultures: The Role of Interactive Arbitration’ (1998) 14 Arbitration International 164 3 William Slate, ‘Paying Attention to ‘Culture’ in International Commercial Arbitration’ (2004) 59 (3) Dispute Resolution Journal 96, 101 4 Gabrielle Kaufmann-Kohler, ‘When Arbitrators Facilitate Settlement: Towards a Transnational Standard’ (2009) 25 Arbitration International 1897 5 Katie Shonk, ‘How to Resolve Cultural Conflict: Overcoming Cultural Barriers at the Negotiation Table’ (Harvard Law School, Programme on Negotiation, 10 September 2019) <https://www.pon.harvard.edu/daily/conflict-resolution/a-cross-cultural-negotiation-example-how-to-overcome- cultural-barriers/> 6 Sam Blay, ‘Party Autonomy in Chinese International Arbitration: A Comment on Recent Developments’ (1997) 8 American Review International Arbitration 331, 339 7 Kun Fan, Arbitration in China: A Legal and Cultural Analysis (Oxford, Hart, 2013) 200-202 8 (2016) 11 Kun Fan, ‘Glocalisation' of International Arbitration-Rethinking Tradition: Modernity and East-West Binaries Through Examples of China and Japan’ (2016) 11 (2) University of Pennsylvania East Asia Law Review 244, 292 9 Tony Cole, ‘Commercial Arbitration in Japan: Contributions to the Debate on Japanese ‘Non-Litigiousness’’ (2007) 40 New York University Journal of International Law and Politics 29, 114 2 (a) Awareness of Cultural Sensitivities-Confucianism: Harmony vis-à-vis Confrontation Legal cultures consist of attitudes and values enshrined in society with regard to the Chinese law and its legal system.10 Chinese culture prefers non-confrontational methods of conflict resolution.11 These values in this scenario may be expressed as a preference for mediation over litigation.12 For instance, Western legal system is generally labelled with litigious culture, while Chinese is characterised by preference on harmony and conciliation. In China, the concept of personal relations (guanxi) plays an important role, and maintaining harmony of relations in proceedings is given greater weight than legal rights.13 Chinese are more likely to avoid conflict than Western people. They are so unaccustomed to the concept of Western- style litigation that they do not necessarily even think of court as a realistic